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| Exhibit 99.1 |
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FOR IMMEDIATE RELEASE |
| Approved by: |
| Olga L. Conley |
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| Chief Financial Officer |
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| (617) 376-4300 |
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| URL: http://www.jjill.com |
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| Investor Relations: |
| Chad Jacobs |
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| Integrated Corporate Relations |
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| (203) 222-9013 |
Quincy, MA, October 23, 2003 – The J. Jill Group, Inc. (Nasdaq: JILL) today reported financial results for the third quarter ended September 27, 2003. Net sales for the third quarter were $82.3 million or 2.9% higher than last year’s $80.0 million. The company generated an operating loss for the quarter totaling $4.7 million compared to operating income of $6.3 million in the prior year. The company posted a net loss for the quarter of $2.9 million or $0.15 per share versus net income of $3.6 million or $0.18 per diluted share in the third quarter of the previous year. Prior year third quarter results included a charge of approximately $1.0 million for costs incurred related to a potential strategic acquisition by the company that was abandoned.
Third quarter sales productivity in the direct segment, as measured by demand per 1,000 square inches circulated, was down by 35% while retail segment sales per square foot declined by 4% when compared to last year.
For the nine months ended September 27, 2003 the company recorded net sales of $262.1 million compared to $239.7 million in the prior year. Operating income for the nine-month period was $7.3 million or 2.8% of net sales compared to $22.0 million or 9.1% of net sales in the prior year. Net income for the nine months was $4.0 million or $0.20 per diluted share versus $12.7 million or $0.64 per diluted share in the previous year.
Gordon R. Cooke, President and Chief Executive Officer, commented, “As we have previously indicated, the tone of business since July has been very challenging for The J. Jill Group. We attribute this primarily to infrastructure weaknesses and transition issues — with respect to both channel migration and merchandising and product development — and the impact these factors have had on our recent merchandise offerings. We are addressing these issues with ongoing efforts to improve our operating infrastructure in design, product management, sourcing, product integrity and merchandising. Among other things, we are committed to increasing the amount of color and novelty print in our offerings and improving the quality and fit of our merchandise going forward.”
“To assure that we move as rapidly as possible toward a new and enhanced process we are reorganizing the product management and merchandising area. We are very pleased to announce that Stephen Pearson has been promoted to Executive Vice President of Merchandising and Product Development. Reporting to Steve are Kelly D. Cooper, Vice President of Design, Bryson Hopkins, Vice President of Merchandising, and John M. Pletzke, Vice President of Product Management and Sourcing. Over the past year or so as we have worked closely with Steve, first as a consultant, then as an employee, it has become clear that he possesses the experience and talent to build a world-class product management and merchandising organization. I am confident that with Steve at the helm we are assembling the necessary expertise and will be implementing the appropriate processes,” continued Mr. Cooke.
Looking forward, for the fourth quarter of fiscal 2003 the company is targeting sales to be between $109.0 and $114.0 million and earnings per diluted share to range between $0.09 and $0.14.
The sales and earnings targets contained in this release are not guarantees of actual performance. Historically, J. Jill’s performance has deviated, often materially, from its targets. These statements do not include the potential of any business risks, opportunities or developments that may occur after October 23, 2003. J. Jill does not expect to report on its progress during the quarter, or to comment on it to analysts or investors, until after the quarter has ended.
Mr. Cooke concluded, “Although we are clearly in the midst of a difficult transition I believe that we have identified an appropriate course of action – and that we are making progress in expanding and upgrading our human and systems resources to enable us to service our customers’ needs effectively and efficiently through all three channels. Additionally, as we go through this transition, we plan on mitigating some of the risk by reducing the number of pages in our catalogs by approximately 15% in fiscal 2004 and by holding our new store openings to 20 in fiscal 2004. We believe these steps are essential in order to minimize our short-term risk as we make the investments necessary for the long-term growth of J.Jill.”
The J. Jill Group’s conference call to discuss its third quarter earnings will be broadcast live today at 4:30 p.m. Eastern Time at www.jjillgroup.com, and will be archived online within one hour of the completion of the conference call.
The J. Jill Group is a multi-channel specialty retailer of high quality women’s apparel, accessories and footwear. The Company currently markets its products through catalogs, retail stores and an e-commerce website. J. Jill is designed to appeal to active, affluent women age 35 and older.
This press release contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Various factors could cause the results of The J. Jill Group to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: the continued success or possible future failure of the retail store initiative; the ability of J. Jill to effectively manage its operations and growth in a multiple distribution channel environment; significant changes in customer acceptance of J. Jill’s product offerings; changes in competition in the apparel industry; changes in consumer spending, fashion trends and consumer preferences; changes in, or the failure to comply with, federal and state tax and other government regulations; the customary risks of purchasing merchandise abroad, including longer lead times, higher initial purchase commitments and foreign currency fluctuations; timely receipts of inventory from vendors; possible future increases in expenses and labor and employee benefit costs; the ability of J. Jill to attract and retain qualified personnel; business abilities and judgment of management; the existence or absence of brand awareness; the existence or absence of publicity, advertising and promotional efforts; the success or failure of operating initiatives; the mix of J. Jill’s sales between full price and liquidation merchandise; general political, economic and business conditions and other factors, including those detailed from time to time in J. Jill’s SEC reports, including its Annual Report on Form 10-K filed on March 28, 2003. J. Jill disclaims any intent or obligation to update these forward-looking statements.
(tables to follow)
THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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| Three Months Ended |
| Nine Months Ended |
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In thousands, except per share data – unaudited |
| Sept. 27, |
| Sept. 28, |
| Sept. 27, |
| Sept. 28, |
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Net sales |
| $ | 82,325 |
| $ | 80,012 |
| $ | 262,053 |
| $ | 239,724 |
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Cost of products and merchandising |
| 57,958 |
| 49,746 |
| 175,510 |
| 148,595 |
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Gross margin |
| 24,367 |
| 30,266 |
| 86,543 |
| 91,129 |
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Selling, general and administrative expenses |
| 29,113 |
| 24,012 |
| 79,194 |
| 69,168 |
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Operating income (loss) |
| (4,746 | ) | 6,254 |
| 7,349 |
| 21,961 |
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Interest, net |
| 183 |
| 167 |
| 546 |
| 551 |
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Income tax provision (benefit) |
| (2,078 | ) | 2,466 |
| 2,788 |
| 8,678 |
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Net income (loss) |
| $ | (2,851 | ) | $ | 3,621 |
| $ | 4,015 |
| $ | 12,732 |
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Earnings (loss) per share: |
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Basic |
| $ | (0.15 | ) | $ | 0.19 |
| $ | 0.21 |
| $ | 0.67 |
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Diluted |
| $ | (0.15 | ) | $ | 0.18 |
| $ | 0.20 |
| $ | 0.64 |
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Weighted average shares outstanding: |
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Basic |
| 19,576 |
| 19,420 |
| 19,572 |
| 18,944 |
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Diluted |
| 19,576 |
| 20,350 |
| 20,069 |
| 20,041 |
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THE J. JILL GROUP, INC. |
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NET SALES SUMMARY |
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| Three Months Ended |
| Nine Months Ended |
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In thousands – unaudited |
| Sept. 27, |
| Sept. 28, |
| Sept. 27, |
| Sept. 28, |
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Catalog |
| $ | 27,581 |
| $ | 35,035 |
| $ | 97,544 |
| $ | 112,029 |
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E-commerce |
| 14,219 |
| 15,375 |
| 49,788 |
| 45,569 |
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Direct total |
| 41,800 |
| 50,410 |
| 147,332 |
| 157,598 |
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Retail |
| 40,703 |
| 29,846 |
| 115,317 |
| 82,848 |
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Other |
| (178 | ) | (244 | ) | (596 | ) | (722 | ) | ||||
Net sales |
| $ | 82,325 |
| $ | 80,012 |
| $ | 262,053 |
| $ | 239,724 |
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THE J. JILL GROUP, INC. |
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DIRECT CONTRIBUTION RECONCILIATION |
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| Three Months Ended |
| Nine Months Ended |
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In thousands – unaudited |
| Sept. 27, |
| Sept. 28, |
| Sept. 27, |
| Sept. 28, |
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Direct |
| $ | 9,535 |
| $ | 16,945 |
| $ | 42,570 |
| $ | 52,312 |
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Retail |
| (1,544 | ) | 1,946 |
| (46 | ) | 5,553 |
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Total direct contribution |
| 7,991 |
| 18,891 |
| 42,524 |
| 57,865 |
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Unallocated shared-service costs |
| (6,503 | ) | (6,142 | ) | (18,620 | ) | (18,181 | ) | ||||
General and administrative expenses |
| (6,234 | ) | (6,495 | ) | (16,555 | ) | (17,723 | ) | ||||
Operating income (loss) |
| $ | (4,746 | ) | $ | 6,254 |
| $ | 7,349 |
| $ | 21,961 |
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THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands — unaudited |
| Sept. 27, |
| Sept. 28, |
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Assets: |
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Cash and cash equivalents |
| $ | 47,963 |
| $ | 27,137 |
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Accounts receivable |
| 8,820 |
| 11,728 |
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Inventory |
| 43,986 |
| 49,759 |
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Prepaid catalog expenses |
| 7,242 |
| 7,244 |
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Deferred income taxes |
| 7,012 |
| 6,308 |
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Other current assets |
| 6,941 |
| 5,489 |
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Total current assets |
| 121,964 |
| 107,665 |
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Property and equipment |
| 123,727 |
| 106,155 |
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Other non-current assets |
| 3,887 |
| 3,457 |
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Total assets |
| $ | 249,578 |
| $ | 217,277 |
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Liabilities and stockholders’ equity: |
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Accounts payable and accrued expenses |
| $ | 48,914 |
| $ | 40,860 |
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Current portion of long-term debt |
| 1,687 |
| 1,764 |
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Total current liabilities |
| 50,601 |
| 42,624 |
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Long-term debt |
| 12,672 |
| 14,255 |
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Deferred credits from landlords |
| 33,303 |
| 21,147 |
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Deferred income taxes |
| 3,414 |
| 1,332 |
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Total liabilities |
| 99,990 |
| 79,358 |
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Capital stock |
| 107,896 |
| 106,420 |
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Retained earnings |
| 41,692 |
| 31,499 |
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Total liabilities and stockholders’ equity |
| $ | 249,578 |
| $ | 217,277 |
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THE J. JILL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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| Nine Months Ended |
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In thousands — unaudited |
| Sept. 27, |
| Sept. 28, |
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Cash flows provided by operating activities: |
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Net income |
| $ | 4,015 |
| $ | 12,732 |
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Depreciation and amortization |
| 11,706 |
| 9,043 |
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(Gain) loss on trust assets |
| (217 | ) | 154 |
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Deferred income taxes |
| 695 |
| 2,692 |
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Changes in assets and liabilities |
| 13,119 |
| (4,729 | ) | ||
Net cash provided by operating activities |
| 29,318 |
| 19,892 |
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Cash flows used in investing activities: |
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Additions to property and equipment |
| (24,184 | ) | (26,749 | ) | ||
Investment in trust assets |
| (793 | ) | (2,310 | ) | ||
Increase in cash held in escrow |
| (355 | ) | (179 | ) | ||
Net cash used in investing activities |
| (25,332 | ) | (29,238 | ) | ||
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Cash flows (used in) provided by financing activities: |
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Borrowings under (payments of) debt, net |
| (1,231 | ) | (1,326 | ) | ||
Proceeds from stock transactions |
| 474 |
| 7,657 |
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Net cash (used in) provided by financing activities |
| (757 | ) | 6,331 |
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Net increase (decrease) in cash and cash equivalents |
| 3,229 |
| (3,015 | ) | ||
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Cash and cash equivalents at: |
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Beginning of period |
| 44,734 |
| 30,152 |
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End of period |
| $ | 47,963 |
| $ | 27,137 |
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THE J. JILL GROUP, INC.
2003 STORE OPENINGS |
| LOCATION |
| OPENING |
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The Galleria |
| Houston, TX |
| Mar-03 |
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Rosedale Center |
| Roseville, MN |
| Apr-03 |
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Shoppes @ Grand Prairie |
| Peoria, IL |
| Apr-03 |
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The Mall in Columbia |
| Columbia, MD |
| Apr-03 |
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Twelve Oaks |
| Detroit, MI |
| Apr-03 |
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Stonestown Galleria |
| San Francisco, CA |
| May-03 |
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Towson Town Center |
| Towson, MD |
| May-03 |
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Stamford Town Center |
| Stamford, CT |
| Jun-03 |
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Providence Place (Petites expansion) |
| Providence, RI |
| Jul-03 |
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Mall at Green Hills |
| Nashville, TN |
| Jul-03 |
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Montgomery Village |
| Santa Rosa, CA |
| Jul-03 |
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The Shops at Boardwalk |
| Kansas City, MO |
| Jul-03 |
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Northshore Mall |
| Peabody, MA |
| Aug-03 |
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Barton Creek Square |
| Austin, TX |
| Aug-03 |
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Shoppes at Briargate |
| Colorado Springs, CO |
| Aug-03 |
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River Oaks |
| Houston, TX |
| Sep-03 |
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Memorial City |
| Houston, TX |
| Sep-03 |
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Short Pump Town Center |
| Richmond, VA |
| Sep-03 |
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The Shoppes at Arbor Lakes |
| Minneapolis, MN |
| Sep-03 |
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Stony Point |
| Richmond, VA |
| Sep-03 |
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Main Street Promenade |
| Naperville, IL |
| Sep-03 |
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Greenway Station |
| Madison, WI |
| Sep-03 |
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One Pacific Place |
| Omaha, NE |
| Sep-03 |
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Shoppes @ English Village |
| Montgomeryville, PA |
| Oct-03 |
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North Park Mall |
| Davenport, IA |
| Oct-03 |
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Orland Square |
| Chicago, IL |
| Oct-03 |
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Valencia Town Center |
| Valencia, CA |
| Oct-03 |
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The Gardens |
| West Palm Beach, FL |
| Oct-03 |
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